A new mix to keep lights on

Tran­si­tion­ing the UK’s elec­tric­i­ty sup­ply to accom­mo­date a low­er car­bon emis­sion envi­ron­ment is going to have a sig­nif­i­cant impact on its future gen­er­a­tion mix – a greater use of renew­ables, nuclear, gas for gen­er­a­tion, car­bon cap­ture for exist­ing coal-fired sta­tions and more.

Simon Read­er, head of cor­po­rate com­mu­ni­ca­tions at RES, says: “The Large Com­bus­tion Plant Direc­tive (LCPD) will see a reduc­tion of 13 per cent in coal-fired gen­er­a­tion before 2020, with an almost total phase out of coal after 2030, oth­er than the more expen­sive route of new coal plants fit­ted with car­bon cap­ture and stor­age tech­nol­o­gy.” This will mean an increas­ing­ly dom­i­nant role for renew­ables. In its Gone Green pro­jec­tions to 2035, for exam­ple, Nation­al Grid sug­gests that renew­able gen­er­a­tion could reach 100 gigawatts (GW) by 2030.

How that will impact the ener­gy mix, how­ev­er, remains down to the pol­i­cy envi­ron­ment. Con­tracts for dif­fer­ence – long-term con­tracts to pro­vide sta­ble and pre­dictable incen­tives for com­pa­nies to invest in low-car­bon gen­er­a­tion – will have a clear impact on the uptake of nuclear and renew­ables, with the biggest impact seen from 2025 onwards.

Matt Ger­main, asso­ciate direc­tor in the envi­ron­ment group of inter­na­tion­al law firm Osborne Clarke, says the con­tri­bu­tion of on and off­shore wind and solar can be pre­dictably fore­cast; a bit like nuclear if the new fleet is built up. Con­tri­bu­tions from ener­gy from waste and on-farm anaer­o­bic diges­tions are hard­er to pre­dict, yet both can pro­vide a decen­tralised source of base-load pow­er.

Dis­trib­uted ener­gy, espe­cial­ly res­i­den­tial solar, could also poten­tial­ly be a game chang­er. Ian Thomas, man­ag­ing direc­tor at Turquoise Inter­na­tion­al, points out: “There is a soci­etal change where peo­ple want to con­trol their ener­gy usage; there is a grow­ing inter­est in dis­trib­uted gen­er­a­tion of all kinds,” he says.

And as Toby Fer­enczi, founder of home ener­gy ser­vice provider Han­er­gy UK, says with house­hold­ers able to make up to 12 per cent return on invest­ment on res­i­den­tial solar, it’s mov­ing from niche to main­stream.

NEW LIFESTYLES

Effi­cien­cy, both indus­tri­al and domes­tic, will have an impact on demand and the ener­gy mix. Mr Read­er says: “Once – if – the poor par­tic­i­pa­tion in the government’s effi­cien­cy pro­grammes are over­come, then fur­ther increas­es will large­ly depend on the adop­tion of new lifestyles, for exam­ple self-con­sump­tion using PV [pho­to­volta­ic solar pan­els] and new poli­cies, such as those that sup­port res­i­den­tial bat­tery stor­age com­bined with PV, as is the case in Ger­many.”

With house­hold­ers able to make up to 12 per cent return on invest­ment on res­i­den­tial solar, it’s mov­ing from niche to main­stream

It is effi­cien­cy in com­bi­na­tion with demand response that has the great­est poten­tial to impact the ener­gy mix, by manip­u­lat­ing load to match demand. The imple­men­ta­tion of smart meters and smart grid enable more active local net­works, which also impacts mar­ket struc­ture.

David Hill, busi­ness devel­op­ment direc­tor of Open Ener­gi, says: “Oth­er new tech­nolo­gies, such as active net­work man­age­ment sys­tems and new elec­tric­i­ty stor­age tech­niques, are also facil­i­tat­ing an entire­ly dif­fer­ent way to bal­ance sup­ply and demand, where demand can be as flex­i­ble as gen­er­a­tion.

“The intro­duc­tion of the capac­i­ty mar­ket should … encour­age the devel­op­ment of demand response espe­cial­ly where it is allowed to com­pete on a lev­el play­ing field with tra­di­tion­al gen­er­a­tion.”

Yet it’s pos­si­ble that demand response oper­a­tors will not be able to par­tic­i­pate in the Decem­ber 2014 capac­i­ty mar­ket auc­tion, only in sub­se­quent 2015 and 2016 auc­tions, for a capped 400–900 megawatt (MW) vol­ume. This assumes that demand response will con­tribute just 1 per cent of peak demand, with no prospect of this increas­ing any time soon, as gen­er­a­tors will have a 15-year hold on capac­i­ty con­tracts.

The biggest ques­tion though is the future role of ener­gy stor­age. Giv­en the inter­mit­tent nature of many renew­able sources, demand for grid-scale ener­gy stor­age is grow­ing rapid­ly. Stor­age sup­ports the grid in terms of avoid­ed wind cur­tail­ment and infra­struc­ture upgrades, reduced reserve pow­er and CO2 from open-cycle gas tur­bines, and in absorb­ing reac­tive pow­er.

At the moment the UK has just 2.8GW of grid-scale stor­age at four sites, all of it pumped hydro and the most recent of which was built more than 30 years ago. As such, the UK has 2GW less stor­age than it needs now and is expect­ed to have a 6GW deficit by 2020. One of the chal­lenges is the dif­fi­cul­ty in com­par­ing dif­fer­ent types of ener­gy stor­age. There are a broad range of avail­able tech­nolo­gies, with dif­fer­ent sizes tar­get­ing dif­fer­ent mar­kets, from pow­er man­age­ment, large scale, micro and so on, rang­ing from fly­wheels, bat­ter­ies, com­pressed air, pumped stor­age and pow­er-hydro­gen stor­age.

“The use of a chem­i­cal stor­age solu­tion, such as hydro­gen, offers a very viable and prac­ti­cal option for mass ener­gy stor­age,” says Dr Hen­ri Winand, chief exec­u­tive of Intel­li­gent Ener­gy. When renew­able ener­gy is con­vert­ed to hydro­gen, using elec­trol­y­sis, it can be used and stored in a num­ber of ways. For instance, it can be co-min­gled into the exist­ing nat­ur­al gas infra­struc­ture as a method of stor­age and trans­porta­tion for when ener­gy is need­ed most. Gas-fired pow­er sta­tions could also use this nat­ur­al gas/hydrogen feed­stock direct­ly for ener­gy pro­duc­tion using upgrad­ed tur­bine com­bus­tion tech­nol­o­gy for gas-to-pow­er re-elec­tri­fi­ca­tion.

The prob­lem is there is no real strat­e­gy for stor­age in the UK. In Bel­gium, demand and gen­er­a­tion are treat­ed as equiv­a­lent tech­nolo­gies, which would need to hap­pen in the UK for demand response to oper­ate at a sig­nif­i­cant grid scale. As Turquoise International’s Mr Thomas points out, at grid scale, the sys­tem is not set up for stor­age. In the UK, the elec­tric­i­ty sup­ply chain has been dis­ag­gre­gat­ed, mean­ing no one com­pa­ny can take full advan­tage of syn­er­gies across the sup­ply chain. With­out a strat­e­gy, it is dif­fi­cult to plan for a devel­op­ing mar­ket.

The UK is set to lose some of its old gen­er­a­tors and that pow­er must be replaced, but the chal­lenge lies in how. Tomorrow’s ener­gy mar­ket will be the polar oppo­site of our his­tor­i­cal cen­tralised dis­tri­b­u­tion – it will be bi-direc­tion­al, flex­i­ble, poten­tial­ly dis­trib­uted and clear­ly var­ied.

To ensure the UK makes the most of the oppor­tu­ni­ty, we must plan for the future and that means more than 1 per cent peak­ing demand for demand response. It’s time for vision and a clear path on how inno­va­tion and sys­tem inte­gra­tion will trans­form the UK’s ener­gy mix.